By Ali Imran
ISLAMABAD: Pakistan’s economic momentum remained steady through Financial Year 2025 (FY25), with real GDP growing by 2.68% and inflation expected to stay within 3% to 4% for June 2025, according to the Minis-try of Finance’s latest Monthly Economic Outlook.
The report underscored Pakistan’s improved fiscal and external positions in FY25. The current account posted a surplus of $1.81 billion, the fiscal deficit narrowed, and the primary balance registered a sur-plus of 3.2% of GDP during the July–April period.
These gains have been reinforced by the Extended Fund Facility (EFF) and the Resilience and Sustaina-bility Facility (RSF), which enhanced policy credibility and investor sentiment amid stabilisation efforts.
Remittances, exports, and imports showed upward trends during the first 11 months of FY25. Work-ers’ remittances increased by 28.8%, rising from $27 billion in FY24 to nearly $35 billion in the current year. The growth in inflows supported a return to surplus in the current account, contributing to ex-change rate stability and reserve accumulation.
Exports witnessed annual growth, though a decline was recorded on a monthly basis. In May 2025, ex-ports stood at $2.4 billion — down from over $3 billion in May 2024. Imports grew by 11.5% during the same period, reflecting increased demand for capital and intermediate goods as industrial activity sta-bilised.
Despite this, foreign direct investment declined by 14.4% year-on-year, highlighting continued investor caution amid global uncertainty and local structural challenges.
The fiscal outlook showed improvement, with FBR revenues up by 25.9% and non-tax income increas-ing by a significant 68.1%. This fiscal performance, supported by reforms under the IMF programme, enabled a reduction in the overall deficit and helped maintain a primary surplus.
The ministry reported that external inflows and administrative measures supported the accumulation of foreign exchange reserves, even as the rupee depreciated by Rs5.03 compared to the previous fis-cal year.
Inflation during the July–May period was recorded at 4.6%, reflecting continued disinflation, particular-ly in food and energy prices. With improved inflation expectations, the central bank reduced the policy rate from 20.5% to 11%—a cumulative cut of 950 basis points.
The policy easing is expected to support credit expansion, revive private sector activity, and stimulate growth in the coming quarters.
Despite the broader recovery, large-scale manufacturing output declined by 1.52% in the fiscal year to date. The Ministry acknowledged that while several industrial segments have shown resilience, struc-tural bottlenecks, energy constraints, and input costs continue to weigh on output.
